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Mavrix Photographs, LLC v. LiveJournal, Inc.

IP/Entertainment Case Law Updates April 7, 2017

Ninth Circuit reverses district court holding that DMCA safe harbor protects social media platform LiveJournal from copyright infringement liability for postings of celebrity photos, finding that issues of fact exist as to whether volunteer platform moderators acted as LiveJournal’s agents under common law of agency.

Mavrix Photographs LLC, a celebrity photography company, filed a copyright infringement suit against LiveJournal Inc., a social media platform that allows users to create and run thematic online communities. Between 2010 and 2014, LiveJournal’s users submitted 20 of Mavrix’s photographs to one of LiveJournal’s celebrity-themed communities. Some of the photographs contained either generic or “Mavrixonline.com” watermarks. A team of volunteer moderators led by a LiveJournal employee reviewed and approved the photographs before posting them to the platform. LiveJournal moved for summary judgment, arguing that the safe harbor provision of Section 512(c) of the Digital Millennium Copyright Act protects internet service providers from liability for, among other things, infringing material residing on systems or networks at the direction of users. The district court granted LiveJournal’s motion, finding that LiveJournal made a threshold showing that it posted Mavrix’s photographs online at the direction of its users.

On appeal, the Ninth Circuit reversed and remanded. Because the DMCA’s safe harbor focuses on the internet service provider’s role in posting infringing material to its site, the court reasoned that the critical inquiry was not the users’ submission of infringing photographs to LiveJournal, but rather LiveJournal’s role in posting the photographs to its platform. The issue of whether Mavrix’s photographs were posted at the direction of users or by LiveJournal itself depended on whether the acts of the volunteer moderators in screening and posting users’ submissions could be attributed to LiveJournal. According to the Ninth Circuit, the district court erred in rejecting Mavrix’s argument that volunteer moderators could be agents of LiveJournal, which would have made LiveJournal liable for the moderators’ acts. The Ninth Circuit held that genuine issues of material fact existed as to whether the moderators were in fact LiveJournal’s agents, including factual disputes regarding the moderators’ authority to act for LiveJournal and the level of control LiveJournal maintains over its moderators. For example, there was evidence presented that LiveJournal maintained significant control over the moderators, including by providing them with instructions as to the content that should be approved. On the other hand, the moderators were unpaid volunteers, who were free to end their relationship with LiveJournal at any point, and they had authority to reject submissions for reasons other than those provided by LiveJournal.

In order to provide guidance to the district court and the parties on remand, the Ninth Circuit discussed the two remaining requirements for establishing the safe harbor defense. If LiveJournal were to show that the moderators were not its agents, or that the photographs were posted at the direction of the users, LiveJournal would then have to show that it lacked both actual and “red flag” knowledge of the infringements. The Ninth Circuit directed the district court on remand to consider not only that Mavrix failed to notify LiveJournal of the infringements, but also any evidence of LiveJournal’s subjective knowledge of the infringing nature of the posts. To determine whether LiveJournal had red flag knowledge, the fact finder would need to assess whether it would be objectively obvious to a reasonable person that posting photographs containing a Mavrix watermark was infringing. LiveJournal would also have to establish either that it lacked the right and ability to control the infringements or that it did not financially benefit from the infringements it could control.

Finally, the Ninth Circuit vacated the district court’s order denying Mavrix discovery as to the identities of the LiveJournal moderators, noting that the determination as to whether the moderators are LiveJournal’s agents should inform the district court’s evaluation of Mavrix’s discovery requests.